The Impact of the #MeToo Movement on California Employment Laws

The #MeToo movement, with its focus of preventing sexual harassment and sexual assault, has led to the passage of new California employment laws. Some of these laws are good for employers, some are bad, and some depend on your political outlook. Regardless of political affiliation, there is no doubt that the #MeToo movement has influenced California lawmakers into passing new legislation aimed at supporting the #MeToo movement. Here are a few laws that will take effect on January 1, 2019.

Freedom from Defamation

It is common practice for potential employers to call former employers for a reference on prospective employees. Currently, employers are permitted to inform another prospective employer whether the employer would rehire an employee. Such communications are deemed to be privileged and protected from a lawsuit for defamation — if done without malice.

The defamation protection now extends to information about sexual harassment allegations. AB 2770 permits employers to disclose (a) complaints of sexual harassment by an employee to an employer based on credible evidence; (b) communications between the employer and interested persons regarding a complaint of sexual harassment; and (c) communications by the employer whether the employer’s decision to not rehire the employee is based on the employer’s determination that the former employee engaged in sexual harassment. Once again, this information must be conveyed without malice, which means the previous employer cannot call to “warn” the future employer.

This new law is good for businesses because it protects free speech and allows for the free exchange of information without fear of a defamation lawsuit. However, employees must be aware that an accusation of sexual harassment does not end with a new job.

Elimination of Confidentially from Settlement Agreements

Currently, it is common practice for businesses to settle sexual harassment claims with settlement agreements that demand confidentiality. Beginning in January 2019, that practice will no longer be available as the legislature has determined that it is against public policy for businesses to pay for silence.

SB 820 adds Section 1001 to the Code of Civil Procedure and makes confidentiality provisions in a settlement agreement, entered into on or after January 1, 2019, void as a matter of law and against public policy. This applies to all civil and administrative actions with claims related to (a) sexual assault; (b) sexual harassment; (c) workplace harassment or discrimination based on sex; (d) failure to prevent an act of workplace harassment or discrimination based on sex; (e) retaliation against a person for reporting harassment or discrimination based on sex; (f) harassment or discrimination based on sex; or (g) retaliation against a person for reporting harassment or discrimination based on sex.

While businesses can no longer demand confidentiality, it is still available to the claimant. SB 820 expressly allows for: (1) a provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, including pleadings filed in court as long as the opposing party is not a government agency or public official; and (2) a provision that shields the disclosure of the amount paid in settlement of a claim.

With the implementation of this new law, businesses must be extra cautious about preventing and investigating sexual harassment claims. Sweeping such claims under the rug will not make them go away and, someday, that information will be made public – as a matter of policy.

Corporations: Boards of Directors

SB 826 adds Sections 301.3 and 2115.5 to the Corporations Code and will require, among other things, that by December 31, 2019, a publicly held corporation whose executive offices are located in California to have at least one female on its board of directors. No later than December 31, 2021, corporations will be required to have a minimum number to two female directors if the corporation has five directors or to three female directors if the corporation has six or more directors.

The violation of this law will carry a hefty fine as it provides that the Secretary of State may adopt regulations to implement this section and may impose the following penalties: (a) $100,000 for failure to timely file board member information with the Secretary of State; (b) $100,000 for a first violation; and (c) $300,000 for a second or subsequent violation.

Conclusion

Whether the #MeToo movement is a temporary fad or an enduring catalyst for change is yet to be seen. However, one thing is for certain – the California legislature has embraced this new political climate and made it into law.

Daniel Thompson is an employment lawyer with Davis & Wojcik APLC, a Southern California based law firm with offices located in Temecula and Hemet. He can be reached at (951) 652-9000.